Net direct tax revenues rise 9% to ₹10.82 lakh crore; corporate advance tax boosts growth

India’s direct tax kitty has recorded healthy growth in the first half of the fiscal year 2025–26, with net collections rising 9.18% year-on-year to ₹10.82 lakh crore as of September 17, 2025. The uptick has been driven largely by higher corporate advance tax payments, buoyant Securities Transaction Tax (STT) inflows, and slower outgo of refunds, according to data released by the Income Tax Department.

Gross vs net collections

Gross direct tax collections for the period stood at ₹12.43 lakh crore, registering a modest 3.39% increase over ₹12.02 lakh crore collected in the same period last year. However, refund issuances fell sharply by 23.87% to ₹1.61 lakh crore, compared to ₹2.10 lakh crore a year ago. This contraction in refunds provided a significant boost to net tax revenues.

As a result, net collections touched ₹10.82 lakh crore, higher than the ₹9.91 lakh crore netted during the comparable period of FY 2024–25.

Corporate sector remains growth anchor

Corporate taxpayers accounted for a major share of the mop-up. Net corporate tax collections rose to ₹4.72 lakh crore, against ₹4.50 lakh crore in the same period last year.

Non-corporate taxes, continued to overtake corporate tax collections—comprising collections from individuals, Hindu Undivided Families (HUFs), firms, Associations of Persons (AoPs), and others—posting steady inflows of ₹5.83 lakh crore, higher than ₹5.13 lakh crore last year.

STT collections reflect market depth

A standout trend was the rise in Securities Transaction Tax (STT) collections, which climbed to ₹26,306 crore this year from ₹26,154 crore a year ago. While the year-on-year increase of about 0.6% is modest, the consistently high STT inflows underline strong trading volumes and sustained investor participation in capital markets. The steady rise also indicates that buoyancy in equity markets continues to support the government’s direct tax base.

Other minor taxes added nearly ₹292 crore, compared with ₹1,845 crore collected last year.

Advance tax trends show divergence

Advance tax payments, a key barometer of economic activity and profitability across segments, presented a mixed picture.

Corporate advance tax surged 6.11% to ₹3.52 lakh crore from ₹3.31 lakh crore last year, underscoring resilient earnings in India Inc.

Non-corporate advance tax, however, declined 7.30% to ₹96,784 crore compared to ₹1.04 lakh crore in the previous year, suggesting some moderation in individual and small business tax payments.

Overall, advance tax collections grew 2.90% to ₹4.49 lakh crore.

What the Numbers Indicate

The data underscores a few key themes:

1. Corporate resilience – With steady profitability, corporates are leading the tax momentum, aided by strong advance tax flows.

2. Household and small business strain – The dip in non-corporate advance tax collections hints at uneven income growth or cautious tax planning among individuals and smaller firms.

3. Lower refunds aiding net inflows – The sharp fall in refunds has effectively inflated net tax receipts, though this may normalize in subsequent months if refund issuances pick up.

4. Equity market depth – Even with marginal growth, STT collections at over ₹26,000 crore underscore the importance of market activity in boosting tax revenues.

Outlook

With nearly half the fiscal year still ahead, policymakers are closely watching direct tax trends to assess revenue buoyancy against budget targets. The strong corporate advance tax numbers suggest optimism about corporate earnings, while the flat STT growth and fall in non-corporate contributions could signal pressure points in household and small business segments.